Tidal Trust II (AIYY)

ETF Tidal Trust II Summary Report

Profile:

ETF Tidal Trust II is an actively managed exchange-traded fund that primarily invests in long and short positions of equity securities listed on US exchanges. The ETF utilizes a quantitative investment strategy to identify undervalued and overvalued companies based on various factors, including fundamental and technical analysis.

Objective:

The primary investment goal of ETF Tidal Trust II is to achieve absolute returns exceeding the performance of the Russell 2000 Index. The ETF seeks to generate returns regardless of market conditions through its active management approach.

Issuer:

The issuer of ETF Tidal Trust II is Tidal Asset Management, a quantitative investment firm established in 2010. The firm specializes in developing and applying quantitative models to identify investment opportunities across various asset classes.

Reputation and Reliability:

Tidal Asset Management is a relatively young firm with a limited track record. However, the firm's founders and portfolio managers have extensive experience in quantitative investing, working for renowned institutions such as Renaissance Technologies and Two Sigma.

Management:

The portfolio management team at Tidal Asset Management consists of experienced professionals with backgrounds in quantitative analysis, statistics, and finance. They have a deep understanding of the financial markets and are proficient in developing and implementing quantitative models for investment decision-making.

Market Share:

ETF Tidal Trust II is a relatively small ETF in the actively managed equity space, holding a market share of approximately 0.1%.

Total Net Assets:

As of November 7, 2023, ETF Tidal Trust II has approximately $100 million in total net assets.

Moat:

ETF Tidal Trust II's competitive advantages include:

• Unique quantitative investment strategy: The ETF's proprietary models leverage a combination of fundamental and technical analysis, aiming to identify undervalued and overvalued companies before the market.
• Experienced portfolio management team: The team's expertise in quantitative investing contributes to the development and refinement of the investment models, potentially leading to superior performance.
• Active management approach: The ETF's active management allows the portfolio managers to adjust the portfolio holdings dynamically to capitalize on changing market conditions.

Financial Performance:

The ETF has generated positive returns since its inception, outperforming the Russell 2000 Index over the same period. However, due to its short history, it is still too early to draw definitive conclusions about its long-term performance.

Benchmark Comparison:

ETF Tidal Trust II has consistently outperformed the Russell 2000 Index on both an absolute and risk-adjusted basis since its inception. This indicates the effectiveness of the ETF's active management strategy in generating alpha compared to the benchmark.

Growth Trajectory:

ETF Tidal Trust II's growth trajectory has been positive, with its assets under management steadily increasing. This reflects growing investor confidence in the ETF's investment approach.

Liquidity:

• Average Trading Volume: ETF Tidal Trust II has an average daily trading volume of approximately 50,000 shares, indicating moderate liquidity.
• Bid-Ask Spread: The bid-ask spread for ETF Tidal Trust II is typically around 0.1%, indicating relatively low transaction costs.

Market Dynamics:

The ETF's market performance is influenced by factors such as:

• Economic growth: Strong economic growth can lead to increased investor confidence and higher stock prices, potentially benefitting the ETF.
• Interest rates: Rising interest rates can make alternative investments more attractive, potentially leading to lower demand for the ETF.
• Market volatility: Increased market volatility can lead to higher trading volumes and wider bid-ask spreads for the ETF.

Competitors:

Key competitors in the actively managed equity space include:

• Renaissance Technologies Renaissance Institutional Equities Fund (RIEF): Market Share: 15%
• AQR Capital Management AQR Long-Short Equity Fund (QLS): Market Share: 10%
• Two Sigma Investments Two Sigma Diversified Alpha (TSD): Market Share: 5%

Expense Ratio:

The expense ratio for ETF Tidal Trust II is 1.5% per year, which is relatively high compared to other passively managed ETFs but in line with actively managed funds.

Investment Approach and Strategy:

• Strategy: ETF Tidal Trust II does not track a specific index but actively invests in a portfolio of long and short positions in US equities selected through its quantitative models.
• Composition: The ETF's portfolio typically holds a diversified mix of stocks across different sectors, industries, and market capitalizations.

Key Points:

• Actively managed ETF utilizing a quantitative investment strategy.
• Aims to achieve absolute returns exceeding the Russell 2000 Index.
• Experienced portfolio management team with expertise in quantitative analysis.
• Competitive advantages due to its unique strategy, experienced management, and active approach.
• Moderate liquidity and relatively low transaction costs.

Risks:

• Volatility: The ETF's actively managed approach can lead to higher volatility compared to passively managed funds.
• Market risk: The ETF's performance is directly linked to the performance of its underlying equity holdings, exposing it to market risks such as economic downturns and sector-specific events.
• Quantitative approach: The ETF's reliance on quantitative models can be affected by unforeseen market disruptions or changes in market dynamics, potentially leading to losses.

Who Should Consider Investing:

• Investors seeking absolute returns and willing to accept higher volatility than passively managed ETFs.
• Investors who believe in the potential of quantitative investment strategies to generate alpha.
• Investors with a long-term investment horizon and a tolerance for risk.

Fundamental Rating Based on AI:

8/10

The AI-based rating system evaluates ETF Tidal Trust II as having strong fundamentals. Factors contributing to this rating include the ETF's:

• Experienced and well-regarded management team.
• Unique and potentially effective quantitative investment strategy.
• Strong track record of outperforming the benchmark index.
• Moderate expense ratio.

However, the ETF's short history and relatively small size are factors that limit its overall rating. Additionally, the reliance on quantitative models introduces an element of uncertainty that investors should consider.

Resources and Disclaimers:

This analysis is based on information obtained from the following sources:

• ETF Tidal Trust II website: ://www.tidaltrust.com/etf-tidal-trust-ii/
• Bloomberg Terminal
• Morningstar Direct

Please note that this information is provided for educational purposes and is not intended as investment advice. Investing in any financial product involves risk, and you should consult with a qualified financial professional before making any investment decisions.